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Strong yen sends Nikkei tumbling to one-month low

JIJI

Stocks took another tumble Monday, dampened mainly by the yen’s strengthening, with the Nikkei average hitting a one-month closing low.

The 225-issue Nikkei average closed down 468.85 points, or 3.32 percent, at 13,661.13, the lowest finish since June 27. On Friday, the key market gauge plunged 432.95 points.

The Topix index of all first-section issues fell 38.61 points, or 3.31 percent, to end at 1,128.45, after shedding 35.26 points the previous trading day.

Both indexes extended their losing streak to a fourth session.

The Tokyo market got off to a weak start, as the yen’s rise worsened investor sentiment further after a fall of nearly 3 percent in the Nikkei average Friday.

Not only export-oriented issues but also domestic demand-dependent stocks met with selling.

The Nikkei average extended losses toward the close to end at its session low, chiefly due to a downswing of index futures and weak performances of other Asian markets, brokers said.

The yen rose past 98, a level unseen since late June, in overseas trading Friday and in Tokyo trading Monday on speculation that the U.S. Federal Reserve will continue its quantitative monetary easing for an extended period.

Hopes for better earnings at exporters in the current business year have receded somewhat due to the stronger yen, although their assumed dollar exchange rates for the year remain lower than the current level, brokers said.

“Disappointing earnings reports from major exporters last week may have made investors hold off buying” prior to a flurry of earnings reports this week, said Toshiyuki Kanayama, market analyst at Money Inc.’s financial intelligence department.

Brokers also noted that concerns over a slowdown in the Chinese economy weighed down the Tokyo market.

“With the Nikkei average falling below its key support lines such as the 25-day and 75-day moving averages, selling pressure increased,” Kanayama said.

Some market sources said that the Nikkei average accelerated its downswing partly due to selling related to arbitrage unwinding after opening below 14,000, brokers said.

Losers trounced winners 1,676 to 57 in the TSE’s first section, while 15 issues were unchanged. Volume fell to 2.565 billion shares from Friday’s 2.714 billion.

All 33 sector subindexes in the first section lost ground.

Brokerages Nomura and Daiwa plummeted 5.73 percent and 4.25 percent, respectively, while megabank groups Sumitomo Mitsui and Mitsubishi UFJ suffered hefty losses.

Among export-oriented issues, automaker Toyota, the most heavily traded first-section issue in terms of value, tumbled 4.07 percent. Peer Honda and Nissan as well as tire makers Bridgestone and Yokohama Rubber were also downbeat, as were high-tech firms Sony, Canon and Kyocera.

Also on the minus side were oil developer Inpex, clothing retailer Fast Retailing and shipping firms Mitsui O.S.K. Lines and Kawasaki Kisen.

JGBs end flat

The key Japanese government bond futures contract erased its early gains to end flat Monday.

The lead September contract on 10-year JGBs closed at 143.63, unchanged from Friday. Turnover fell to 13,329 contracts from 19,113.